Does R&D Investment Drive Employment Growth? Empirical Evidence using Industry-Level from Japan

Shah, I.H., Kollydas, K., Lee, P.Y., Malki, I. and Chu, C. 2024. Does R&D Investment Drive Employment Growth? Empirical Evidence using Industry-Level from Japan. International Journal of Finance & Economics. 29 (1), pp. 102-118. https://doi.org/10.1002/ijfe.2677

TitleDoes R&D Investment Drive Employment Growth? Empirical Evidence using Industry-Level from Japan
TypeJournal article
AuthorsShah, I.H., Kollydas, K., Lee, P.Y., Malki, I. and Chu, C.
Abstract

Strong demographic headwinds have motivated Japan to strengthen its economy by fostering innovation. This paper draws on a panel of business enterprises operating in 33 industries in Japan to examine how research and development (R&D) activities affect employment. Our findings suggest that employment gains are associated with innovation, both at the aggregate level and within groups of major industries. The positive impact of technological advancement is more pronounced in the manufacturing sector. The results reveal heterogeneous patterns of the key determinants of employment growth based on the level of industries’ routine intensity, but they accord well with the compensation theory concerning the connection between innovation and job creation. These results will be of interest for policymakers to design targeted economic strategies by supporting technological development in Japan and could also serve as a compass for other countries with similar workforce structure and macroeconomic characteristics.

Keywordsinnovation
R&D expenditure
employment
routine-intensity
manufacturing
industry-level analysis
JournalInternational Journal of Finance & Economics
Journal citation29 (1), pp. 102-118
ISSN1099-1158
Year2024
PublisherWiley
Publisher's version
License
CC BY 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1002/ijfe.2677
Web address (URL)https://onlinelibrary.wiley.com/doi/10.1002/ijfe.2677
Publication dates
Published online12 Jul 2022
Published in print2024

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